Gold News

Spike in Bond Yields Hits Gold Hardest in 18 Months But Silver and PGMs Regain Steep Drops

GOLD PRICES sank Wednesday morning, dropping at close to the fastest pace in over 18 months, as longer-term interest rates jumped across Western markets following stronger-than-expected UK inflation data.
Silver and the industrially-useful platinum-group metals also whipped violently as 10-year US Treasury yields jumped to the highest in 5 weeks at 3.63% per annum before edging back.
Seeking a 'safe haven' after last month's mini-banking crisis, investment-fund managers came into April with their heaviest allocation to government bonds since the March 2009 depths of the global financial crisis, according to the latest Bank of America Global Fund Manager survey. 
In particular, "Money managers are concerned that troubles brewing in the US and European commercial real estate markets could set off a broader credit crisis," says the Wall Street Journal of the BoA findings, with almost 1-in-2 respondents saying that commercial real estate is now the most likely driver of a "systemic" credit event, "up from 10% in March."
Chart of Dollar gold price, last 5 years. Source: BullionVault
With gold priced in Dollars briefly dropping to $1970 but then bouncing towards $1990, the precious metal bottomed 3.8% below last Thursday afternoon's London PM benchmark – gold's 2nd highest such level ever at $2048 per ounce – with a drop close to its steepest 4-session plunge since August 2021.
Silver prices meantime lost 2.5% before regaining it all at $25.28 per ounce, while platinum lost and regained more than $20 to trade back at $1084 – up 3.9% for the week so far – as sister-metal palladium cut its rise since the weekend from 10.9% to 8.8% after jumping Tuesday to a 10-week high at $1647.
Now trading over $300 per ounce above March's approach of 4-year lows, palladium – which finds almost 4/5ths of its end-user demand from emission-reduction systems in gasoline-engine vehicles – last month saw speculators in Nymex futures and options contracts place the heaviest bearish bets on record, with the Managed Money category of trader reaching a net short position as a group equal to more than half of total open interest.
Electric-car pioneer Tesla (Nasdaq: TSLA) today cut the price of its new vehicles to US consumers for the 6th time this year, sending its shares over 3% lower ahead of the New York opening.
Germany's rail network will grind to a halt this Friday after members of transport union EVG voted to reject a 5% pay offer from Deutsche Bahn, pressing ahead with their call for a 12% increase.
While Bank of England interest rates reached 4.25% last month, consumer-price inflation in the UK ran at 10.1% new data said today.
Yesterday saw the giant GLD gold ETF shrink for the 4th session running, down to its smallest size in 3 weeks and extending the weakness in gold ETF flows which had already seen the sector expand by only 0.4% as the gold price rose by more than 1/5th from October's 2.5-year lows.
Today's overnight drop in global gold prices then saw the premium for metal landed in China – gold's No.1 consumer market – rise above $9 per ounce, the strongest incentive for new imports in a fortnight.
But with domestic gold prices in India still near last week's new records above 60,000 Rupees per 10 grams, jewelry demand in the precious metal's No.2 consumer "might ease a bit" for the Akshaya Tritiya festival – now promoted as an "auspicious" time to buy gold – according to analysts and dealers, although advance bookings have been "encouraging".
India is now on track to become the world's most populous nation this summer, overtaking China, after Beijing reported the first annual drop in 4 decades in the population of Guandong – the world No.2 economy's leading export province.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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